It Looks Like Abraxas Petroleum Corporation's (NASDAQ:AXAS) CEO May Expect Their Salary To Be Put Under The Microscope

The results at Abraxas Petroleum Corporation (NASDAQ:AXAS) have been quite disappointing recently and CEO Bob Watson bears some responsibility for this. At the upcoming AGM on 13 July 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Abraxas Petroleum

Comparing Abraxas Petroleum Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Abraxas Petroleum Corporation has a market capitalization of US$26m, and reported total annual CEO compensation of US$395k for the year to December 2020. We note that's a decrease of 41% compared to last year. We note that the salary portion, which stands at US$382.1k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$326k. From this we gather that Bob Watson is paid around the median for CEOs in the industry. Moreover, Bob Watson also holds US$300k worth of Abraxas Petroleum stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$382k	US$532k	97%
Other	US$13k	US$143k	3%
Total Compensation	US$395k	US$675k	100%

Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. Abraxas Petroleum is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Abraxas Petroleum Corporation's Growth Numbers

Abraxas Petroleum Corporation has reduced its earnings per share by 111% a year over the last three years. In the last year, its revenue is down 60%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Abraxas Petroleum Corporation Been A Good Investment?

With a total shareholder return of -95% over three years, Abraxas Petroleum Corporation shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Bob receives almost all of their compensation through a salary. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Abraxas Petroleum you should be aware of, and 1 of them can't be ignored.

Important note: Abraxas Petroleum is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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